Price war: Airlines like SpiceJet, IndiGo and others slash fares for second time in a month

MUMBAI: Cash-strapped budget carrier SpiceJet started a fresh round of fare cuts of as much as 30 per cent on Tuesday forcing rivals IndiGo, GoAir and Jet Airways to follow suit.

Air India, too, is likely to join the fare war. "Under this offer, all customers can get a 30 per cent discount on the already discounted 30-day advance purchase base fare and fuel surcharge for SpiceJet domestic flights for travel till April 15, 2014. For example (and depending on date of travel), a Delhi-Mumbai fare that is otherwise Rs 10,098 all-inclusive for last minute purchase can be purchased for as little as Rs 3,617 under this offer," SpiceJet said in a press release.

Soon India's biggest carrier IndiGo followed with a similar offer which was then matched by GoAir and Jet Airways. Jet Airways' discount is on the base fare as well as fuel surcharge while the other offers are only on base fare. Last week, the offer led to a surge of almost 300 per cent in bookings for online travel agents. This offer was no different.Vikram Malhi, General Manager, South & Southeast Asia, Expedia, said he has already seen a surge of 150 per cent in bookings. "Also, by selling some percentage inventory at discounted prices during lean season, airlines are in a better position to assess their bookings and load factor to plan for the holiday season," he added.

A senior executive at one of the airlines said with the last offer the airline's advance bookings shot up to fill 45 per cent of its flights, up from the usual 30 per cent.

Airlines usually do not put more than 15 per cent of their total inventory on such offer. "We have AirAsia coming in with lower fares soon. The question is why not beat them at attractive offers," said the executive. On the flipside, however, experts see the offers as ways to raise urgent cash to make payments and run operations. For instance, the cash raised by Spice-Jet would have helped it make the delivery payment for the Boeing 737 plane it received on Thursday.

Unlike AirAsia, SpiceJet has been making heavy losses. The carrier posted its highest ever loss of Rs 559 crore in the July-September quarter. Sydney-based consultant CAPA-Centre for Aviation expects the airline to lose up to $35 million in October-December, considered a strong quarter for travel.